State of the Union: Interview With Robert Gibbs, Interview With Senator McCain

Aired February 15, 2009 - 09:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN KING, HOST: I'm John King in Phoenix, Arizona. This is our "State of the Union" report this Sunday, February 15th.

President Obama is poised to cap a big policy win by signing a nearly $800 billion economic rescue plan, but will it really create the 3 to 4 million jobs he has promised? We ask the president's chief spokesman, Robert Gibbs.

After all the talk of bipartisan change, only three Republicans voted with the president. Are GOP worries right or are Republicans playing politics with the economy? An exclusive conversation with Arizona Senator John McCain.

And as Phoenix prepares for an Obama visit next week, the city is also busy with a marquee sports event -- the NBA all-star game. Basketball is the president's game, and we break it down and assess the cultural impact of the Obama presidency with NBA legends, past and present. That's all ahead in this hour of "State of the Union."

Our guests in just a moment, but first, a quick Sunday morning rundown. Here in our 9:00 a.m. Eastern hour, as always, interviews with top newsmakers in the United States and around the world. At 10:00 a.m., Howie Kurtz and his "Reliable Sources" take a critical look at the media. At 11:00 a.m. Eastern, members of the best political team on television discuss and debate the day's major stories, including highlights of the Sunday morning talk shows. And at noon eastern, the only live Sunday interview program in America gives one newsmaker "The Last Word." And through it all, we keep our promise to leave Washington and to learn from you. So let's get started. We're in Arizona this morning, and for good reason -- you might say good reasons. The president is coming this week to discuss a new plan to deal with the housing crisis. Arizona ranks third in the nation in foreclosures. He will visit just after signing the big and controversial new stimulus plan. The unemployment rate here in Arizona -- 6.9 percent. And he will arrive here facing new pressures to act on the emotional issue of illegal immigration, a debate we explored up close here in recent days.

On a lighter note, Mr. Obama is a huge basketball fan, and halftime at tonight's all-star festivities will include a taped presidential message promoting the president's community service agenda.

A packed agenda, to say the least. So let's get started with the White House press secretary Robert Gibbs, who, like the president, is spending his Valentine's weekend in Chicago. Robert Gibbs, thanks for joining us. Let's get straight to the accountability test.

The president did get a big policy win this past week. He got nearly $800 billion in economic stimulus spending. He will sign it into law in Denver. I want to show you the front page of the "Denver Sunday Post" here. "Stimulus' big stage in Denver."

As he signs it into law in Denver this week, the American people are asking, when will we see what we paid for? The president says, Robert, 3 to 4 million jobs. How many of them by the end of 2009?

GIBBS: Well, look, John, let's step back for a second, because in just four weeks' time, this president, working with Congress and both parties in Congress will get a nearly $800 billion economic recovery plan. It will go through Congress and signed into law by him.

We hope those jobs begin to get created very quickly. We think the money is going to get out the door relatively quickly to help states, so they don't have to lay off police officers or firefighters or teachers, that we can help create jobs through investment in alternative energy that will double the amount of alternative energy production in just a few years.

So the president is focused on making sure that that money gets out the door very quickly.

But, John, as you know, you're in Arizona, where the unemployment rate has gone up, and certainly the number of jobs that we've lost over just the last three months shows you that the economy is actually getting worse right now, not getting better. So I think it's safe to say that things have not yet bottomed out. They are probably going to get worse before they improve. But this is a big step forward toward making that improvement and putting people back to work.

KING: Well, Robert, this, I'm holding it in my hand, this is the bill that is supposed to make things better. And I'll try to turn it different ways so our viewers can see it at home. It's about 1,000 pages. Many are questioning not only the substance of this bill, Robert, but the process of this bill. I am going to hold up one page. This is $800 billion in government spending. There are literally handwritten scribbles on the side of the page, changes to this bill being made just as people were voting on it. You can't find a member of Congress who has read all this.

And my question to you is, for a president who promised a new era of transparency and openness in government, did urgency trump transparency when it came to passing this bill?

GIBBS: Not at all, John. But let's step back and understand the urgency for a second. As I mentioned, we lost 600,000 jobs just last month. We lost -- during this recession, we've lost 3.6 million jobs in a little over a year, half of those jobs in the last three months, which means the unemployment rate is actually getting worse. It's accelerating at a time in which many people are really hurting.

The urgency to get something done was very important. But, John, I think what we have here is a very balanced approach that's going to put people back to work. For the first time, we're going to put money back in the pockets of middle-class Americans, not just those that have done well for the fast few years, but people who need it the very most. We're going to make some needed investments that will help our long-term economic growth. All of those things together provide a balanced approach that will get this economy moving again, put people back to work, and we hope to see improvement soon.

KING: I want you to listen to the president. In selling this legislation, he left Washington and hit the road. One of the places he went was to the factory floor in Peoria, Illinois. Caterpillar has laid off more than 22,000 people in the first quarter of 2009. I want you to listen briefly to one of the president's pitches.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Jim, the head of Caterpillar, said that if Congress passes our plan, this company will be able to rehire some of the folks who were just laid off. And that's a story I'm confident will be repeated at companies across the country.

(END VIDEO CLIP)

KING: Now, that was the president on the floor of Caterpillar, Robert Gibbs. But Jim Owens, the CEO he was talking to, said after that speech that yes, he supported the stimulus bill, but, that no, he said, will he rehire those people? He said, quote, "I think realistically, no. The truth is we're going to have more layoffs before we start hiring again." Did Jim Owens change his story for the public than what he told the president, or was the president exaggerating what the CEO had told him about this bill?

GIBBS: No, John, if you look at what Jim Owens said on Friday, to make sure that things were clear, he said if Congress went ahead and passed a strong stimulus package, combined with other measures around the world, he thought it was likely that he would be able to re-evaluate the layoffs that they've made at Caterpillar. Look, there's no doubt that in this piece of legislation, there's a dramatic increase in infrastructure spending to build roads and bridges and repair those, to modernize our schools. And the exact equipment that Caterpillar builds is going to be used to build some of those roads and bridges. That's going to put people back to work in East Peoria, in downstate Illinois and all over this country.

KING: Robert, I want to ask you some issues the president will confront when he comes here to Arizona. He is coming to talk about housing and foreclosure, but in this state right now, the illegal immigration debate is brewing up again, and it now confronts the new president. Several Democrats, eight of them, sent the president a letter this past week, including a Democrat from this state, saying halt further construction of the fence along the U.S. border, the U.S./Mexico border. Much of it has been completed, but during the campaign the president did indicate he might reverse that policy, if elected.

Will he agree with those Democrats and stop further construction of the border fence?

GIBBS: You know, John, I haven't seen that letter, but I know the president would tell you that we can't just do one thing to stem the immigration problem, that we have to look at this in a comprehensive way. And I think that's what the president will do in approaching this problem.

We're fortunate enough to have in our Homeland Security secretary the former governor of Arizona, Janet Napolitano, who I know will also be a big advocate for a comprehensive solution. She understands this problem as the president does. And I think that's what you'll see the approach taken by this administration.

KING: Does comprehensive solution mean a path to citizenship or a path to legal status? Draw the distinction for us for the 12 million or more illegal immigrants in the United States.

GIBBS: Well, look, we have got to do a series of things. We have got to certainly tighten up our border security. We do have to ensure that people pay a fine and pay back taxes and go to the end of the line, learn English, before we ensure a pathway to citizenship for many people in this country.

But we also have to -- one of the important things is make sure that businesses aren't gaming the system and undercutting American workers by trying to hire illegal immigrants that they know are illegal. Only by doing all of these things will we be able to, in a comprehensive way, solve our immigration problem that's bedeviled this country for many decades.

KING: Let's look a little back, Robert, as we close here, but mostly look forward. You called this a bipartisan stimulus bill. You've only got three Republican votes. I know the president met with Republicans. I know he wishes he had more votes. And I know you at the White House blame the Republicans for saying no. But let's look for it -- this was a president who promised a new era of bipartisanship. Do you view this as a skirmish, one big philosophical difference over spending, over the role of government, or do you view this as the beginning of a partisan war with the Republicans early in the administration? And as you answer, what will the president do moving into the next chapter to try to prove again that he is at least trying to bring the Republicans in?

GIBBS: Well, look, John, I think what you saw from this president was an unprecedented effort to reach out to Republicans. Not just in meetings at the White House, but you had the president drive up to Capitol Hill to meet with Republicans where they work. I think that was certainly unprecedented.

This president has always worked in a bipartisan fashion. He will continue to reach out to Republicans. John, we hope that Republicans will decide they want to reach back.

GIBBS: We understand that nothing is going to get done in this country to improve the lives of the American people if the parties in Washington continue the same old game and continue to fight. Only by working together can we move this agenda forward.

We were fortunate to have Republicans that wanted to work with the president to move this stimulus package forward. He'll continue to reach out, John, to Republicans to ensure that we move a financial stability package, a home foreclosure program, and all of the necessary things to keep this country safe.

KING: I could poke you on immigration, the stimulus bill, bipartisanship for some time. We will get (inaudible).

On a light note, I am here in Phoenix in part because of the NBA all-star game tonight. I had a great treat of sitting down with some legends past and present in the NBA to break down your boss' game. And we took a look at the jump shot, we took a look at his dribbling. They say, you know, he could use some -- maybe move a little bit quicker on defense.

I wanted to get your sense, Robert Gibbs -- I know we will hear from the president at halftime tonight, a community service message. But how much does basketball mean to this president in terms of stress relief, mental health, if you will?

GIBBS: Yeah. You know, John, there are very few days in which I don't see, at some point in the day, the president either handling or dribbling a basketball. I know he's anxious to get out on the court. He is going to play with some friends in Chicago here today. It's been a part of his life for a very long time, growing up in Hawaii and playing with his friends on a playground, and even playing with those very same friends now.

So it's a big part of his life. It helps him get some exercise and relieve some stress. For a little bit of time, he can think about something different.

So it's a big part of his life. He really enjoys it. And I tell you what, John, I can only imagine that if I were to call him now, he would be a little nervous that people like Bill Russell were going to critique his game. That's pretty serious.

KING: Well, if he wants to catch those tips, he can tune in a bit later. Bill Russell, Grant Hill, Magic Johnson, Steve Nash and Chris Paul break down the president's game in just a little bit here. Robert Gibbs, thanks for joining us today. We will have you back on "State of the Union."

GIBBS: Thanks, John.

KING: And up next, a Republican response. Thank you, Robert.

Up next, a Republican response and a "State of the Union" exclusive. Senator John McCain on why he thinks his former rival is off to a terrible start.

In the 10:00 hour, has the media turned on the so-called octo mom? Howard Kurtz tackles that question and a whole lot more.

At 11:00 a.m., our provocative Sunday conversation with the best political team on television.

And at 12:00 p.m., grading the president's game. As we just noted, some of the NBA's all-time greats rate the commander in chief's shot, his dribble, and his hardwood swagger.

(COMMERCIAL BREAK)

KING: Welcome back to "State of the Union." I'm John King, in Phoenix, Arizona this morning. President Obama plans to sign the stimulus bill Tuesday. Here's a look at what it means to you. Most workers will see about $13 a week extra in their paychecks starting in June. People buying a new car or sending a child to college are going to get a tax break, and the government will help laid-off Americans cover the cost of their COBRA health insurance.

Among the outspoken critics is the man who on election night voiced hope of working with his campaign rival. Here in his home state with us for an exclusive conversation is Senator John McCain. Senator, thanks for joining us.

Let's start on that point. I just tried to get Robert Gibbs -- was this a skirmish over philosophical differences -- Republicans don't like this bill -- or was it the beginning of a partisan war? People in your party coming to the calculation let's just say no?

MCCAIN: I don't know the answer to that. I do say, in all candor, that it was a bad beginning. It was a bad beginning because it wasn't what we promised the American people, what President Obama promised the American people, that we would sit down together.

Look, I appreciate the fact that the president came over and talked to Republicans. That's not how you negotiate a result. You sit down together in a room with competing proposals. Almost all of our proposals went down on a party line vote.

Now, I hope that with the next issue -- a TARP will be coming up again...

KING: More bailout money.

MCCAIN: More money. I hope the next time, we will sit down together and conduct truly bipartisan negotiations. This was not a bipartisan bill.

KING: Well, if we're going to do that moving forward, part of that is the spirit. You've given your promise right here you want to do that. He is going to be right here in your home state talking about foreclosures. It's a terrible problem. Will you stand with him and send a signal you're still willing to work with him, or does he have to prove something to you first? MCCAIN: The president doesn't have to prove anything to me. I will be in another part of the state, which I had previous plans to be. But I'm pleased that he is coming here. People here in Phoenix and across our state are hurting very badly, the housing crisis. And I'm sure that he is very welcome here.

But the point is, this bill was not bipartisan. It was -- it is incredibly expensive. It has hundreds of billions of dollars in projects which will not yield in jobs.

Now, if you think we need to improve education, spend money for it, fine. But this was supposed to be a package that was going to create jobs. A lot of this package will not create jobs. A lot of the tax cuts we've tried before of just giving people some money, it hasn't changed the way that savings have been conducted by Americans.

So I'm not happy, and most of us aren't at the lack of true bipartisanship in approaching this legislation.

KING: Let's go to the process just a little bit more, because it's 1,000 pages. It's eight pounds. We had it FedExed out to us here. It is eight pounds. We're contributing to the economy just having it shipped out here. Some of the changes were literally hand- scribbled on the side of the page. This happens all the time, unfortunately.

MCCAIN: That's the old business as usual.

KING: Well, if it's the old business as usual, didn't President Obama promise a new way of doing things in Washington? You say it was a terrible start. Are you sitting in your office these days saying, I told you so?

MCCAIN: No. I'm sitting in my office and saying, look, there's a lot of issues that we've got to face. These are the worst, most difficult challenges, foreign and domestic, perhaps we have faced certainly in our lifetimes. So let's start over now and sit down together.

But, yes, the candidate Obama said that these conferences would be open to the public. He said that the American people would have five days to view it on the Internet. There was commitments made that are certainly not being kept now. And maybe it's all because of their sense of emergency, but it's not what they said they were going to do.

MCCAIN: And, finally, could I just say, Republicans were guilty of this kind of behavior. I'm not saying that we did things different. But Americans want us to do things differently and they want us to work together.

KING: Well, let's stay on the point of the start the new president is off to. You saw Governor Richardson had to withdraw. Former Senator Daschle had to withdraw. Nancy Killefer, who was going to be the chief financial officer, had to withdraw -- in two of those three cases, tax issues. Mr. Geithner was confirmed. He had to pay back taxes. Then your good friend, Judd Gregg, was going to come into the administration. He says he realized, after saying yes, that he had too many philosophical differences.

One of the things you said repeatedly during the campaign for presidency was, he's a nice man, Senator Obama, but he's not ready. Is this proof of you that he does not have the experience to be the chief executive?

MCCAIN: No. But it does show that what I would have done -- and I hate to keep saying it that way -- is get outside the Beltway; get outside of Washington. Get people who have succeeded. Get the Meg Whitmans and the Carly Fiorina and the Fred Smiths and the John Chamberses. Get people who haven't been inside the Beltway, who haven't been part of this incestuous relationship that has caused the special interests and the national interest to somehow be distorted to a degree that the American people have lost confidence in what we do in Washington.

That's what I -- I think is important. Get people who haven't been inside, who haven't been part of the creation of the problem of a crisis of confidence.

KING: Has he talked to you at all?

He had a dinner for you the night before the inauguration, and he said, you know, he wanted to work with you. You say he met with Republicans; hasn't agreed with your ideas.

Any back-channel conversations we don't know about, between you and the president, or you and the president's staff, saying, I want to help you here; here's how we do things, or, you say it's just the same as it was before? MCCAIN: I had a brief phone conversation with the president. Look, he's very busy. He's very busy. And when it's time for us to talk is when there's a specific proposal on an issue that I can probably hopefully have some kind of important input.

Once they decided that Republicans really wouldn't be part of the stimulus package, I didn't expect to hear from him.

KING: You didn't expect to hear from him.

MCCAIN: Well, because we weren't in the -- in the process.

KING: You're up for reelection now. You're going to run, two years from now, here in the state of Arizona. And as you do so, do you have any trepidation about voting no on this plan?

Because your state is hurting. You have 6.9 percent unemployment. You're third in the nation when it comes to foreclosures. From a percentage standpoint, your governor has the biggest budget shortfall, right now, because of the recession, than any governor in the country.

And the supporters of the White House say this bill will bring more than $10 billion and 74,000 jobs to your state.

Could there be a point in your reelection campaign where you have to say, you know what, the president was right and I was wrong?

(LAUGHTER)

MCCAIN: I don't think so. We are laying a debt -- we are committing generational theft. We are laying a huge deficit on future generations of Americans.

In our proposal -- in our proposal, we had a trigger that, when the economy improves -- and it will improve; our economy will come back -- when it does, that this spending would stop.

To paraphrase Milton Friedman, spending programs that are temporary in Washington become permanent. We didn't want that to happen.

And so what I worry about is we lay this huge deficit on future generations of Americans and we don't put our paths back on the track to fiscal sanity.

And if we don't, then you're going to have inflation and debasement of the currency and great problems that will directly affect the people we're trying to help.

KING: We'll take a quick break and we'll continue our conversation in a minute.

And here in Arizona, illegal immigration, always one of Senator McCain's top concerns, a highly emotional issue, right here in this state and across the country -- also, suddenly, a pressing issue for President Obama. And when we come back, a discussion of immigration policy and politics. Stay with us.

(COMMERCIAL BREAK)

KING: I'm John King, and this is "State of the Union." Here are some stories breaking this Sunday morning. A grim search taking place in the Buffalo suburb where a commuter plane crashed. Investigators say the remains of 15 people have been found so far. All 49 people on Flight 3407 and one person on the ground were killed.

Investigators now say it appears the plane did not hit nose first as they originally thought.

A new chapter in the saga involving the former Illinois governor Rod Blagojevich. Illinois Senator Roland Burris now says he was solicited to contribute money to the governors' campaign. But Burris says he refused. He didn't mention any of this to a state impeachment committee.

The big names in basketball holding court tonight at the NBA All- Star game here in Phoenix. I sat down with five of basketball's biggest stars and asked them to rate President Obama's skills on and off the court. That fascinating conversation and much, much more, ahead in "State of the Union."

And welcome back to our live broadcast, here in Phoenix, Arizona. We continue our exclusive Sunday morning conversation, now, with Senator John McCain, the former Republican presidential candidate.

We were talking before about the economic stimulus plan. The president will sign that in Denver, and then he will come here to Arizona and he will want to talk about this issue.

And I want to hold up the Sunday Mesa Tribune, "Foreclosures." This is about a gentlemen who's making money off all of this, a man who cleans pools, at a time when so many houses are foreclosed. But it's much more than that, as you know.

What do you want the president of the United States to do?

What can he do?

And do you trust him to help deal with this crisis?

MCCAIN: Well, I think, first of all, we've got to go back to -- and I understand he's going to say -- talk about it here in Phoenix -- to go back to the fundamental problem that started this -- this conflagration, and that is housing. Until housing prices stabilizes, the economy is not going to stabilize.

So one of our great disappointments in Paulson and TARP I, and now the nonspecificity that Secretary Geithner displayed, which the markets reacted very negatively to, is, let's get to the housing market.

And I was a bit disappointed that, in the conference, the Democrats removed a pretty important provision for a $15,000 tax break for homeowners.

But we've got to get back to stabilizing the housing prices, buy up these bad mortgages, give it to people that can afford the housing so they can stay in their homes.

KING: You got into a lot of trouble, early in the Republican primaries, by pushing your proposal for comprehensive immigration reform, including giving some sort of legal status to those here illegally in the United States.

As you know, the issue is always on the front pages here in Arizona. I have a Mesa Tribune, just from Saturday: "House Judiciary Chairman Calls for a Probe into Sheriff Joe Arpaio, here in Maricopa County."

KING: You have had a rollercoaster relationship with this sheriff. He says he is just simply enforcing the law. He goes into businesses, he's rounding up people. John Conyers, others in Congress say racial profiling. Is the sheriff in line or out of line in your view?

MCCAIN: Having been engaged in the presidential campaign, I haven't paid as close attention. I've disagreed with the sheriff fundamentally about the fact that we need to have a comprehensive approach to illegal immigration. That includes a guest worker program. That includes securing our borders, and it includes putting people on a path to citizenship, that they're behind everybody else, that has no -- that they have to pay fines, et cetera, et cetera.

But we are also now ignoring a huge problem, an existential threat to the country of Mexico, which is the drug cartels are taking over towns along our border. There are killings going on of incredible cruelty and beyond belief, and we ought to be helping the Mexicans try to get these drug cartels under control. The corruption goes the highest levels of government. It's even spilled over to our side. So I would argue that this struggle, the transcendental -- the existential struggle going on between the Mexican government, and we are helping now finally for the first time. But I would argue that is a huge challenge. You're not going to control illegal immigration if the drug cartels have taken over significant parts of Mexico.

KING: In this bad economy, some here illegally say they think about going home, because they can't find jobs in the United States, but they are afraid to go back for just that reason.

I want you to listen to some sound. We sat down with Sheriff Arpaio this week here while we were here in Arizona, and we also talked to a woman named Rubi, who is in this country illegally and recently lost her job. Let's listen to this (ph).

(BEGIN VIDEO CLIP)

RUBI (through translator): The reason I came here was to work and live with dignity. And I don't understand why I have to show these documents.

SHERIFF JOE ARPAIO, MARICOPA COUNTY SHERIFF: I want the president, I want the politicians to say we are going to enforce all the illegal immigration laws. And if you come into this country illegally, you're going to be prosecuted and put in jail. Let them say that. I'm waiting for them to say that. (END VIDEO CLIP)

KING: Sheriff Arpaio says the politicians are too shy about this. That woman, Rubi, who you see in the shadows there, because we can't show her face -- she says she is afraid to stay here because of what she calls the culture of fear, and she's afraid to go home because of the drug cartels. Should she be kicked out of the country right now?

MCCAIN: No one should be in this country illegally, but we do need to give people a path to citizenship. If they've been good citizens, we put them in the back of the line. They pay a fine, they do all the things that are necessary to become good citizens, and give them an opportunity to do so.

We need to enforce our borders. Every nation has to secure their own borders. But all of this has been complicated dramatically by this -- people are being beheaded and hung from bridges. Twenty-one people were killed in Nogales, Sonora just the other day. I mean, it is a huge issue.

And so I think we need comprehensive immigration reform, but I also think that it's been complicated by the drug cartel issue, and I'm surprised Americans have not been made more aware of it.

KING: I want to close by circling back to where we began.

MCCAIN: Sure.

KING: He is your former campaign rival. You think he is off to a terrible start. He's coming to your state. You don't like the way the process worked in the first one. Help me understand what you think he needs to do to get back to that spirit, and what you will do to try to help him, if you will.

MCCAIN: First of all, I don't think he's off to a terrible start. This is quite a victory he has achieved with this legislation. And there's no doubt...

KING: You think it's a terrible bill?

MCCAIN: I think it's a very bad bill and a very bad process we went through. But I was there at inauguration. Millions of Americans are invigorated and inspired by this young president, and he's working hard to bring America together.

I think this was a very bad beginning on this legislation. It is not too late. We can go back the next time we have an issue -- and there will be -- there will be many, including the next TARP -- that we can work together, and we need to. Things are too tough in America. Things are too tough right here where we're sitting today, in Phoenix, Arizona, for us not to work together.

But if you pass a bill that is going to mortgage our children and our grandchildren's futures, without any provision for it, without any criteria for whether it creates jobs or not, we're going to do things that we will be paying for, for a long time.

KING: Senator John McCain, appreciate your time on this Sunday morning in your beautiful home state.

MCCAIN: Thanks, John. Thanks for having me.

KING: And again, thank you for being here. Thank you. Thank you.

The president's constant campaign promise was to change the way business is done in Washington, but with so few Republican votes and such a huge partisan divide, doesn't Washington still look very much the same? Our best political team breakdown up next.

(COMMERCIAL BREAK)

KING: Welcome back to "State of the Union." I'm John King.

The president wanted the big stimulus bill passed by Friday, and it did. So it's a big victory from the White House standpoint. But the fact that just three Republicans voted in favor raises huge questions about that promise to change Washington. Is this the first skirmish of a long partisan war, or will things be more friendly on other issues down the road?

Let's start on that point. Hilary Rosen, to you first. You just heard John McCain. He says this bill I'm holding up here, 1,000 pages, no member of Congress has read every bit of it -- he says this is a terrible beginning for this president, both from a policy standpoint -- he doesn't think it's going to work -- and from a process standpoint, saying the president did not keep his promise to change the way Washington works and reach out to Republicans. What do you say, Hilary?

HILARY ROSEN, CNN CONTRIBUTOR: Well, I say, first of all, it's not true. He actually did reach out to Republicans, had multiple conversations with them, went to their caucuses, got a lot of input, and, in fact, there are a lot of tax cuts in that bill that wouldn't be there but for the president seeking Republican input.

The fact is -- and I was kind of surprised by the McCain interview. He sounded like he is still running for president. You know, he ran for president saying I'm going to cut taxes, I'm going to cut taxes, I'm going to cut taxes. And Barack Obama said, you know what? We've had the biggest tax cuts in the history of the country in the last eight years. That hasn't worked. The economy is not moving. When the private sector isn't spending, the government needs to spend, and that is what this bill does. So you know, it's Barack Obama's turn, and the people are with him.

KING: Kevin, is that what has Republicans bristling this? We won argument from the Democrats? KEVIN MADDEN, GOP STRATEGIST: No, look, I think that President Obama has overpromised and underdelivered on bipartisanship. Look, if there is one thing we know about President Obama, that he has mastered the pageantry and the cosmetics of bipartisanship, but he has yet to really show that he has mastered the actual work that it takes. Going up on to Capitol Hill and just meeting with Republicans in a room is not the same as sitting down and listening to their concerns and actually putting those concerns into perfecting the bill, and that is what has to absolutely happen here, is that while President Obama was talking about bipartisanship, David Obey, Nancy Pelosi, Harry Reid and those that actually wrote this bill paid absolutely no attention to Republicans. And because of that, we have a monstrosity of a spending bill that is actually not going to do exactly what President Obama has said it would do, which is create jobs right away, get this economy moving. Instead, it is going to saddle this generation of Americans with an incredible amount of debt.

ROSEN: You know, I -- I just...

KING: I think part of the issue here could be -- let me jump in for one second, because part of the issue here could be different definitions of bipartisanship. I want you to listen to the House majority leader, Steny Hoyer, who makes the point that you two are debating right now. He defines bipartisanship his way. Let's listen.

(BEGIN VIDEO CLIP)

REP. STENY H. HOYER, D-MD., HOUSE MAJORITY LEADER: Nor does bipartisanship mean that, because there are two parties, each party gets to write exactly its proportion of the bill. That kind of bipartisanship would, frankly, make elections irrelevant. It is a deeply elitist idea, if understood in that context.

(END VIDEO CLIP)

KING: So then, Hillary, if the Republicans don't get to write 47 percent of the bill, if you go by the presidential election results, how do you define bipartisanship? What, if anything, do you think the president could have done differently to maybe quiet this down a bit?

ROSEN: Well, I have to say, I think that, because the Republicans did not vote for the bill, I think it's in their political interest now to say that this -- that the process was wrong and that he wasn't bipartisan enough.

As a -- as a practical matter, they weren't going to vote for this in the House. There was, you know, a Republican caucus. They decided they weren't going to vote for this bill, no matter what it said.

So I think Barack Obama is an optimist on this. I think we have to move past the stimulus bill. There are other things coming up, as John McCain said.

KING: I've lost that feed.

ROSEN: We've got energy. We've got health care. There are other bills that -- that are going to come down the pike with lots of opportunity for Republican input and bipartisan White House.

MADDEN: And, look, I think what we've seen from Steny Hoyer is exactly what the Republican -- or exactly what the Democrat message is, is that we're taking our ball and going home. And, look, the American public had a robust debate about what they wanted to see in Washington. They were tired of the bickering. They were tired of the status quo in Washington.

And what's happened is you've seen Democrats take this -- the election results and say, "Well, this is all about one party. We won; therefore, we're going to run Washington."

Well, look, the American public has said that they want solutions. The American public has said they want people to come together and work on things in a collective fashion.

And I think that Republicans stand a lot to gain by going out there and being the party that is going to challenge the status quo, because all we've seen from Democrats right now is more spending on bigger bureaucracy and it's "my way or the highway" approach. And the American people rejected that.

ROSEN: That's just nonsense. That's just nonsense. There's no analysis that says that that's what happened.

There was a policy discussion. Do we go with spending or do we go with more tax cuts? And the policy decisions that were made by the majority -- and there is a little bit of that, well, you know, we're going to do it our way now, because the country is counting on us, and that's what they voted for.

That's what this came down to was, somebody had to make the decision, and President Obama decided that he was going to go the way the country asked him to go during this election.

As we go down the pike, I think you will continue to see this president reach out to Republicans, get their input on health care, get their input on energy. But when push comes to shove, the country is counting on Barack Obama and a -- and a Democratically controlled Congress to help move this country out of kind of the mess that we've been in for the last eight years.

KING: Kevin, you're the Republican in the discussion, but rate the president. Some Democrats had urged him to get out of Washington, and he did that. He went to the Caterpillar floor in Peoria. He went to Indiana. He will actually sign the bill in Denver and then travel on to where I am in Arizona this week. Is he a better salesman out of Washington than he is at the White House?

MADDEN: Can -- can I be a cold-hearted analyst here instead of a Republican? Absolutely.

KING: Absolutely?

MADDEN: I think that -- look, one of the things that -- that we all know President Obama does well is he has an ability, with his speeches and with his salesmanship, to go out and help leverage public support for some of his policies. If he had done what he did later last week or about a week earlier, then he might have changed the dynamic. But I think, at the end of the day, what we saw was a president who was over-polling the stimulus bill by about 20 to 30 points for the simple fact that he probably waited too long to go out and make the arguments.

Republicans did an incredible job of going out there and pointing out what was wrong with this bill, squaring it with the taxpayer concerns and anxieties about this bill, and ultimately winning this debate, I believe, among the American public.

ROSEN: Well, you know, one of the things we're going to see when we go forward is Barack Obama staying engaged with the American people. That's what will make him continue to be a successful and popular president.

As we saw in the -- in the last several years, George Bush kind of stepped back, went into the White House, and stopped communicating with people. I think, good news or bad news, we're going to see this president out there in the country engaging with the American people and listening and talking.

KING: All right, we'll watch it in the week ahead as he goes to Colorado and to Arizona. Hillary Rosen, Kevin Madden, thank you both for getting up early with us on this Sunday.

And, oddly, the country's recession may be helping authorities fight one battle. We're heading to the front line, the collision of a recession and illegal immigration, next.

(COMMERCIAL BREAK)

KING: Welcome back to "State of the Union." We're here in Phoenix, just a few days ahead of the president. And while his focus here will be on the housing and foreclosure crisis, there's another emotional issue he'll not be able to escape: illegal immigration.

There's pressure on the new president from some fellow Democrats to halt construction of the fence along the U.S.-Mexico border. And here in the Phoenix area, a huge controversy over the aggressive tactics of the local sheriff.

Leading Democrats in Congress want the White House to strip Sheriff Joe Arpaio of some of his powers, accusing him of racial profiling and other tactics they say cross the line. The sheriff tells us he's just doing his job, and he makes the case that, at a time of recession, it is even more important to make sure scarce jobs goes to those legally in the United States.

(BEGIN VIDEOTAPE)

KING (voice-over): A tent city jail on the edge of Phoenix, this yard packed with illegal immigrants. Some complain the desert nights are cold, others about the food. The outspoken sheriff who runs this jail, Joe Arpaio, offers no apologies.

ARPAIO: No. We just arrested 150 in the last 14 days. They're still coming. We're still arresting them.

KING: Arizona is always a front line in the illegal immigration debate, whether the issue is the controversial fence along the U.S.- Mexico border or expanding efforts to sanction employers who hire undocumented workers. And now the punishing recession adds a new wrinkle.

(on-screen): Those are jobs Americans just won't do is the argument you hear all the time. What about now, when you have 8 percent, 9 percent, in some states 10 percent unemployment?

ARPAIO: Right now, everybody's looking for a job, and the jobs are being taken by the illegals, here illegally -- they're criminals -- and the poor people that we have looking for jobs, raise their families, can't find a job?

KING (voice-over): Rubi is a single mother who lives in a modest Phoenix apartment and in the shadows, by Sheriff Arpaio's definition, a criminal. RUBI (THROUGH TRANSLATOR): The reason I came here was to work and live with dignity. And I don't understand why I have to show these documents. I came here to work. I didn't come here to take anything from anybody.

KING: Rubi lost her full-time job at a Phoenix-area spa after her employer asked for proof of citizenship. At the moment, any work is hard to come by.

RUBI (THROUGH TRANSLATOR): Since I lost my job, now I am working four jobs with less money. I do child care, clean houses and offices, work in a photo studio. And because I get paid cash, it is very low, but I'm at least able to survive.

KING: An illegal immigrant like Rubi doesn't get counted when the government makes official counts of the unemployed and underemployed, but those aren't the only statistics that prove the recession's impact.

Three years ago, illegal entry into the United States averaged 800,000 a year. The Hispanic Center estimates it was 500,000 in 2008. It's likely to fall more this year.

And it's not just fewer illegal entries. Dropping enrollment at the St. John Vianney School is proof enough to Father John Herman that some illegal immigrants are leaving.

(on-screen): If a family comes to you to say goodbye, what is it they usually say?

HERMAN: They're usually sad. They love being a part of our parish community. They want to live here in the United States. They want to stay here in Arizona, but there's great sadness.

And they -- they want prayer. They want a blessing before they go, because there is so much uncertainty. There are more and more who -- who come asking me if I know of anybody who needs help. Is there anyone who needs yard work done or some basic construction work or cooking? And I don't have a lot of options for them, unfortunately, in that way.

KING: In tough economic times, Father Herman says some at his English-speaking masses no doubt resent illegals they blame for taking scarce jobs. But he and others who counsel illegal immigrants make the case that tougher enforcement is actually making the recession worse, at least in lower-income Latino neighborhoods.

HERMAN: People stop spending as much, and people left, so that there are more houses that were on the market. And it was a snowballing effect, I think, that it made things worse here in Arizona than they really needed to be.

KING: Rubi has thought of going back to Mexico or to another state if she can't find more stable work soon, but she doesn't want to disrupt her son's schooling, and she bristles at the mention of Sheriff Arpaio. RUBI (THROUGH TRANSLATOR): I do have the fear of getting picked up, like a roundup, where I could get picked up.

KING: But, again, the sheriff has no second thoughts about his approach. To the contrary...

ARPAIO: They hate me, the Hispanic community, because they're afraid they're going to be arrested. And they're all leaving town, so I think we're doing something good, if they're leaving.

(END VIDEOTAPE)

KING: And, again, the sheriff might not question his own tactics, but some members of Congress are. This past week, four senior Democratic members of the House asked the Justice Department to investigate Sheriff Arpaio. He says he's simply enforcing the law and he won't be intimidated.

As you know, one of our goals is to get out of Washington as often as we can. Today, we're in Phoenix, Arizona. In a few short weeks, we've traveled from Illinois to Indiana to Ohio to Vermont, New York, and South Carolina. Well, where should we go next? You can help us out. E-mail us a suggestion at stateoftheunion.com. Tell us why we should come to your city.

We want to say goodbye to our international audience for this hour. But up next, for our viewers here in the United States, we'll go through some of the morning headlines with our friend, Howie Kurtz. Stay with us.

(COMMERCIAL BREAK)

KING: I'm John King in Phoenix, Arizona. This is "State of the Union" for this Sunday, February 15th.

In this hour, our weekly critical look at the media. Is President Obama's race affecting media coverage of him? Howard Kurtz discusses that and more with the PBS correspondent Gwen Ifill. President Obama's senior adviser David Axelrod one of those speaking out on the morning shows this Sunday about his boss's victory on the stimulus bill.

In our next hour, the best political team on television will give us the real stories behind all the Sunday talk.

And does President Obama have game? We'll talk with a group of NBA all-stars, past and present, about his skills on and off the court. That's all ahead on "State of the Union."

Time now, though, as always to hand things over to Howie Kurtz and his "Reliable Sources."